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Google, Facebook Battle Over Exploding Online Video Ad Revenue

Major sporting events, such as the Winter Olympics and the ongoing FIFA World Cup, and the recent high-profile acquisitions by Google and Facebook have fueled this growth. Mike Butcher, editor-at-large at TechCrunch, has said in an email that the increasing sale of smart connected televisions, a market which is dominated by Samsung (SSNLF) and Vizio in the U.S., is also an important factor.

Besides these, Ritter has pointed towards "continued growth and innovation from key players" in the industry as well as Twitter's (TWTR) "effective leveraging of their acquisition of video-sharing app Vine." These have been the primary drivers for the growth of online ad spending this year.

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As a result, some of the leading advertisers, such as MasterCard (MA) and Mondelez International (MDLZ), have been transferring some of their television advertising expenditure to Web videos. However, Ritter has said that "newspapers and magazine publishers" have been a bigger casualty of this shift than the television industry.

Television still has a power to generate tens of millions of predictable viewers, which is evident in the Super Bowl's viewership.

Online videos, on the other hand, attract a larger percentage of younger viewers. As per data provided by Nielsen, around 21% of television viewers are adults aged below 34. For online videos, they make up 30% of the audience.

Moreover, online video ads give marketers and advertisers an "incredible ability to target their audiences at a very granular level on Internet-connected devices," explained Ritter. Furthermore, online video ads have "lower barriers of entry for ad creation for online audiences in terms of both production cost and time required to create new video ad content compared to producing a television ad."

At the time of publication, the author held no positions in any of the stocks mentioned.

This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff.

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